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A Bright Spot from Federal Budget Cuts: Fewer IRS Audits

Internal Revenue Service

Thanks to the government's spending cuts, you may have a smaller chance of being audited this year.

The cuts, known as the sequester, will wipe $600 million from the IRS's budget this year, forcing the agency's nearly 100,000 employees to be furloughed without pay for up to seven days.

Five furlough days have been identified so far -- beginning on May 24 and they will be spread out among separate pay periods, according to the National Treasury Employees Union.

Not only will these furloughs shrink paychecks for IRS workers, but they will also make it harder for taxpayers to receive the assistance they need, and enforcement efforts will be significantly reduced as well, IRS Acting Commissioner Steve Miller said in congressional testimony earlier this month.

"[W]ithout a change in the current budget environment, the American people will see erosion in our ability to serve them, and the federal government will see fewer receipts from our enforcement activities," he said.

Translation for taxpayers: You're less likely to be audited, said Mark W. Everson, vice chairman of tax service firm alliantgroup and former head of the IRS.

"Of course this has an impact on the number of audits," said Everson. "If you have someone working on 20 audits, if they're not working as many days it's going to take longer to finish those and they're not starting new ones."

The irony is that by limiting audits, the sequestration is limiting the revenue that flows into the government's coffers, he said.

Audits have already been on the decline due to budget cuts at the IRS over the last few years. Last year, for example, the number of audits dropped by 5% to about 1.5 million.

Your odds of being audited still rise significantly with the more income you have, however. While the overall chance of being audited is 1%, those odds jump to 18% for people with income of $5 million or more and 27% for taxpayers earning $10 million or more.

But if you do get audited, don't think the IRS is going to be lax just because it's squeezed on resources.

"The [IRS] won't start [as many] new audits, but I think it will be equally rigorous in the ones it conducts, so don't think that they won't be as thorough as they once were," said Everson.

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Its NOT the end of the world to give employees furlough days. The private sector has had furloughs for a long time. Its a great way to temporarily reduce labor costs while keeping employees employed with benefits.
Why doesnt every Federal Employee sign up for 1 to 5 days FURLOUGH without pay between now thru SEP 30th? They are civil servants and this would be great way to help reduce spending and put our government back on track. Nobody loses seniority or benefits with furloughs. Obama needs to show leadership and ask VOLUNTEERS to sign up and I am betting you have more volunteers than you need.

April 29 2013 at 3:32 PM Report abuse rate up rate down Reply
1 reply to dkelmstra's comment

The Feds have already eliminated 331,000 positions since 2008. In addition, NO Federal employee has had a pay increase in 4 years, and increases are still on hold. Being a Civil Servant does not mean an indentured servant. As for putting the government back on track, send in extra with your tax return, if its good enough for Federal employees to give, it should be good enough for you, unless you're a hypocrite.

April 29 2013 at 3:48 PM Report abuse rate up rate down Reply

I believe the IRS actually makes money per employee. This one they should have kept.

April 29 2013 at 1:59 PM Report abuse +1 rate up rate down Reply

"The cuts, known as the sequester, will wipe $600 million from the IRS's budget this year, forcing the agency's nearly 100,000 employees to be furloughed without pay for up to seven days."

This works out to a savings of $6,000.00 per employee for a week's work. WOW!

It makes one wonder what gov't employees get paid...

April 29 2013 at 1:34 PM Report abuse rate up rate down Reply
1 reply to Jeremiah's comment

Its more Obama smoke and mirrors. NONE of the numbers add up under Obama. Didnt we just hire 16,000 new IRS agents to enforce Obamacare?
Federal workers should be asked to volunteer and sign up for 1 to 5 days OFF without pay between now and Sep 30, 2013. I am betting you would far exceed the numbers needed to address sequestration. Furloughs are common in the private sector.

April 29 2013 at 3:35 PM Report abuse -2 rate up rate down Reply

if we had a small national sales tax that everyone pays and scrapped the 73,000 pages of tax code, audits and most of the IRS would be history and April 15 would be just another spring day.

April 29 2013 at 11:38 AM Report abuse rate up rate down Reply
1 reply to scottee's comment
Henry ptnm

You and your national sales tax. Under the national sales tax, any state sales taxes will be added on. They will still need an IRS type of agency to handle it. We will still have any state income taxes, still have to file by April 15th. They will be looking for your sale receipts instead of your income tax returns. There will be no another spring day .

May 05 2013 at 10:06 AM Report abuse rate up rate down Reply